A Levelised Playing Field

The Economist July 26th 2014

Free Exchange: Sun, wind and drain

Wind and solar power are even more expensive than is commonly thought:

“Subsidies for renewable energy are one of the most contested areas of public policy…To take account of all of this (the costs of energy), economists use levelised costs–the net present value of all costs (capital and operating) of a generating unit over its life cycle, divided by the number of megawatt-hours of electricity it is expected to supply..This, however, does not take account of the costs of intermittency of many of energy supplies. For instance, “wind power is not generated on a calm day, nor solar power at night, so conventional power plants must be kept on standby–but are not included in “the levelised cost of renewables.”

A levelised playing field

“If all the costs and benefits are totted up using Mr. Frank’s (Charles Frank of the Brookings Institution) calculation, solar power is by far the most expensive way of reducing carbon emissions…Wind is the next most expensive. Hydropower provides a modest net benefit. But the most cost-effective zero-emission technology is nuclear power…

Mr. Frank’s research is clear: governments should target emissions reductions from any source rather than focus on boosting certain kinds of renewable energy.